INTERVIEW WITH MR ANIS UR REHMAN, CHAIRMAN KBC, ICMAP
Aug 20 - Sep 2, 2012
PAGE: TELL ME SOMETHING ABOUT YOURSELF AND YOUR PROFESSION, PLEASE?
ANIS UR REHMAN: Currently, I am serving Pakistan Civil Aviation Authority as GM Finance and also hold additional charge as Asstt. Secretary CAA Board. I have also served in a Habib Group Company and Dow University of Health Sciences on deputation basis. As regards, my professional activities, I have served two times as Secretary Karachi Branch Council, ICMAP (2009 and 2011) in addition to the responsibility as Chairman CPD & Seminar Committee. Presently, I am serving as Chairman Karachi Branch Council, ICMAP. Let me tell you about my academics. After passing B.Com from Govt. Premier College, Karachi in early eighties, I joined ICMAP. However, when I was in Stage III, a road accident stopped my efforts as I got serious head injury. After some time, I took admission in S.M. Law College and completed LLB. This attempt enhanced my level of confidence and I realized that I may continue my studies. Therefore, I resumed my studies at ICMAP and qualified the same after various ups and downs. Let me tell you why I have explained my efforts in detail. The purpose to explain it is to motivate those students, who are studying and doing efforts to enhance their capabilities. Here, I would quote that "It is not necessary that each effort gets success but success may not be achieved without any effort". Therefore, I recommend to all youngsters to continue their efforts and never be de-motivated and stop the efforts due to any unfortunate situation and mishaps.
PAGE: IT IS SAID THAT MORE THAN 80% FINANCIAL ACTIVITIES IN CORPORATE WORLD ARE RESTRICTED TO REPORTING ONLY. WHAT IS YOUR VIEW ON IT?
ANIS UR REHMAN: Yes, it is correct that our 80% (approx) activities are surrounded for preparation of reports under financial accounting. In our country, we do not maintain the data to generate reports under Management Accounting. The price ingredients of any product or service are (a) direct material (b) direct labor (c) overheads (d) Administrative, Marketing & Financial cost (e) profit margin (f) tax levies (g) intermediaries margins etc. However, in financial accounting, we maintain the data in simple forms i.e. Revenue Minus Expenditures = Profit Margin. It is simple accounting, which is also done by a common person. In my opinion, the methods and techniques of Management Accounting should be followed and implemented to facilitate the management to take appropriate strategic decisions to control the cost, maximize the profitability and to eliminate unnecessary costs. Here, I would also like to quote an example that a doctor is the right person to suggest medicine etc after reviewing the medical reports of a patient indicating levels of temperature, blood pressure, sugar, cholesterol etc.
PAGE: YOUR VIEWS ON TAX BURDEN ON CONSUMERS IN PAKISTAN:
ANIS UR REHMAN: It is very much important and touchy question. Normally, each product or service has the tax burden. In this context, I would like to suggest that we should prepare a list of "life cycle items" e.g. Flour, ghee, oil, sugar, salt, spices, milk, eggs, breads, mineral water etc and make a thorough study of the regional countries that what are their cost ingredients and tax levy on these items. This study report would facilitate the Government to reduce or withdraw the tax burden on these items. I would suggest that the Research & Development Department of ICMAP should take the initiative and prepare this report through a team of dedicated senior students of the Institute. It will be a great contribution to the common person and to the society in general to control the prices of these items.
PAGE: HOW WOULD YOU COMMENT ON THE ROLE OF MANAGEMENT ACCOUNTANT IN THE WORLD IN GENERAL AND IN PAKISTAN IN PARTICULAR?
ANIS UR REHMAN: I would like to point out that there are two professional accounting institutes in Pakistan i.e. ICAP and ICMAP, which have been established under the Act of Parliament. The function of Finance & Accounts is very vital for every organization. The financial reports facilitate the management for timely and strategic decision-making. In this context, the role of both institutes is quite different. I would like to explain the same through an example of cricket game in which there are two types of persons in the ground, (a) players and (b) Umpires. The Chartered Accountants, who are comprehensively trained in Auditing during their articleship, play their role as umpires, whereas, the Management Accountants are comprehensively given knowledge and trainings in Management Accounting. As such, they perform player's role. The beauty of Management Accounting is that the cost of a product or service is determined in detail and all factors are separately reported, which in Financial Accounting is not available. Management Accountant is fully conversant for determination of cost ingredients and their affecting factors. He is capable to prepare reports, which provide meaningful information and data to the management for day to day decision making. Unfortunately, the role of Management Accountant has not been understood in true perspective. Management Accounting is used as tool of management all over the world. Here, I would like to quote example of India, where Cost Audit is mandatory for around 50 industries which provides the information and data to the concerned Government Authority to monitor and control the prices of the products and services. On the other side, we are very much behind them. We focus on financial accounting to prepare annual reports and its audit to satisfy the stakeholders i.e. share holders, creditors, debtors, tax and regulatory authorities etc. I would suggest that we should conduct seminars and workshops for the business and corporate sector to explain the benefits of Management Accounting.
PAGE: HOW DIFFERENT ARE COST AND MANAGEMENT ACCOUNTING PRACTICES IN PAKISTAN AS COMPARED TO INDIA AND OTHER COUNTRIES.?
ANIS UR REHMAN: As earlier said, we are very much behind in management accounting practices as compared to India and other countries. As regards practices followed by these countries, we should make thorough study to review and follow their practices for adoption in our country. In this regard, we should work on fast track basis.
PAGE: COULD YOU SUGGEST THE BEST MODEL FOR COST AND MANAGEMENT ACCOUNTING PRACTICES?
ANIS UR REHMAN: The best model is the one that can be easily implemented. There are various models, which are being followed by some countries. The financial reports are the tool of management. The success and failure of an organization is determined through its financial reports. In financial statements, a company declares its revenue and expenditures as well as margin of profit. It is not a confidential document. Therefore, I suggest that the Government should consider and make necessary legislation whereby, it would be mandatory to disclose the cost ingredients of each product as mentioned above. In this regard, practices adopted by other countries may be reviewed, which would be very much helpful.